Jennerex Plucks $21.6M Private Placement; Is IPO Up Next?

By Marie PowersStaff Writer

Jennerex Biotherapeutics Inc. completed an insider-based $21.6 million private placement, capping a fruitful week that included the full enrollment of a Phase IIb study of oncolytic cancer vaccine Pexa-Vec (JX-594, pexastimogene devacirepvec) in hepatocellular carcinoma (HCC), publication of clinical and preclinical data in Science Translational Medicine and release of three abstracts scheduled for presentation at the American Society of Clinical Oncology (ASCO) meeting next week in Chicago.

The San Francisco-based company said proceeds, raised exclusively from existing shareholders and partner companies, will advance the clinical development of Pexa-Vec in HCC and in the follow-on indication of refractory colorectal cancer. The immunotherapy is designed to de-bulk tumors rapidly using tumor cell lysis, induce a systemic antitumor immune response and selectively target tumor vasculature, resulting in rapid reduction in tumor blood flow.

Chris Peetz, vice president of corporate development at privately held Jennerex, said the financing will extend the company's runway into the first half of 2014, following the release of Phase IIb data at the end of this year. The placement brings the company's total raise to approximately $80 million  an efficient spend for a decade of work that finds its lead candidate on the cusp of a Phase III study.

With an eye to global development, the trial includes patients in the U.S., Europe and Asia. Jennerex is laying the groundwork to move forward next year with a similarly designed Phase III study in HCC that will support parallel regulatory filings.

The company has three regional partners. In 2010, Jennerex licensed European rights to Transgene SA, of Paris, for an undisclosed equity investment and up to $116 million in milestones. As part of that deal, which also included rights to the drug in the Commonwealth of Independent States and the Middle East, Transgene agreed to pick up about 40 percent of the costs for the Phase IIb/III program in HCC and the Phase II program in colorectal cancer, now under way. (See BioWorld Today, Sept. 9, 2010.)

Pexa-Vec was derived from vaccinia, which has its foundation in the work of physician Edward Jenner  the company's namesake  to create a vaccination for smallpox. Jennerex engineered vaccinia to selectively target cancer cells and also designed Pexa-Vec to express GM-CSF, the white blood cell growth factor that prompts the immune system to kill tumor cells. Pexa-Vec exploits the desirable characteristics of vaccinia, including its stealth extracellular envelope, which allows the virus to survive in the bloodstream in the presence of neutralizing antibodies and enables both intravenous (I.V.) and intratumoral administration.

The company's ASCO presentations will include the initial findings of Pexa-Vec in colorectal cancer and first report of I.V. administration, offering "some nice data in a new tumor type with a more flexible administration," Peetz told BioWorld Today.

Findings from the Phase Ib study, released last week with ASCO abstracts, showed that Pexa-Vec genomes detected in blood acutely exceeded the dose threshold for systemic delivery. Patients at the highest dose level showed increased disease stabilization at week four (89 percent high dose vs. 33 percent low dose) and a trend toward increased OS, with 78 percent still alive between five months and 13 months.

Since February, data about Pexa-Vec's mechanism of action also have been featured in Nature Medicine, Cancer Research and last week's Science Translational Medicine paper, which showcased the active immune response in patients following treatment with the oncolytic vaccine. The findings suggested Pexa-Vec might be broadly useful against solid tumors, since it can broadly infect epithelial cells. In fact, the research team from Jennerex and South Korea's Pusan National University and Medical Research showed that Pexa-Vec works through a number of independent mechanisms, including bursting cancer cells, complement-dependent toxicity and a polyclonal antibody response.

"It's a nice demonstration of an active personalized immune response built by Pexa-Vec," Peetz said.

For the time being, the company has tabled partnering discussions to focus on moving Pexa-Vec across the goal line "as quickly as we can" in HCC and to prepare for the next steps in colorectal cancer, he added.

With critical development milestones on the horizon, Jennerex also is calculating its next financing move, which could involve an initial public offering (IPO).

"We're watching IPO activity very carefully," Peetz confirmed. "I think our profile as a company is right for the public markets, and our product is at the right stage compared to some of the recent IPOs. So that's definitely on the list for us."

In other financings news:

 Aeterna Zentaris Inc., of Quebec City, entered an at-the-market (ATM) agreement with MLV & Co. LLC to sell up to 2.5 million common shares on Nasdaq, for an aggregate of up to $4.6 million. MLV will serve as sales agent for any ATM transactions. On Thursday, the company's shares (NASDAQ:AEZS) lost 3 cents, closing at $2.03.

 Apricus Biosciences Inc., of San Diego, priced an underwritten public offering of 6 million shares of common stock at $2.85 per share and warrants to purchase up to an aggregate of 3 million shares of common stock, for proceeds of $17.1 million. The warrants may be exercised immediately upon issuance, with a five-year term and an exercise price of $3.40 per share. The company said certain officers and directors participated in the offering. Apricus Bio granted the underwriters a 30-day option to purchase up to 900,000 additional shares of common stock and warrants to purchase up to 450,000 additional shares of common stock for overallotments. The company said proceeds will be used for general corporate purposes, including clinical trial expenses and additional regulatory efforts related to erectile dysfunction drug Vitaros (alprostadil 0.3 percent topical cream) and female sexual dysfunction candidate Femprox (alprostadil 0.4 percent topical cream). The offering is expected to close on or about May 29. Lazard Capital Markets LLC acted as sole book-running manager, with Roth Capital Partners LLC and Cantor Fitzgerald & Co. acting as co-managers. On Thursday, the company's shares (NASDAQ:APRI) lost 65 cents, or 19.7 percent, closing at $2.65.

 Stemline Therapeutics Inc., of New York, said underwriters exercised in full their option to purchase an additional 620,689 shares of common stock at $14.50 each, generating an additional $9 million as part of the company's previously disclosed $60 million public offering. The option to purchase additional shares is expected to close on or about May 28. Jefferies LLC and Aegis Capital Corp. acted as joint book-running managers, with Roth Capital Partners as co-lead manager. In January, Stemline became the first biotech to close an initial public offering in 2013, pricing at $11. On Thursday, the company's shares (NASDAQ:STML) gained 60 cents, or 4 percent, to close at $15.42. (See BioWorld Today, Jan. 30, 2013.)